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Product matters

The New Start mortgage for divorcees from The Mortgage Business is the second mortgage this year targeted at the increasing number of divorcees in the UK.

The first, from Charcol, enabled a divorced partner to use maintenance income without a court order as a source of income for a mortgage.

The New Start loan, marketed by The Mortgage Partnership, not only helps in this way for the partner receiving maintenance but also assists the partner who is paying the maintenance to buy a property and remain on the mortgage deed of the original property if required.

The mortgage deducts the annualised monthly maintenance and mortgage payments, like normal loan commitments, rather than needing to cover both mortgages.

This is an excellent feature, but not exclusive to TMB. For example, Portman and Alliance & Leicester will treat maintenance and mortgage payments in the same way, up to 85 per cent loan to value. Someone could take advantage of their mainstream residential products, which could offer more advantageous rates and a wider choice than the 5.84 per cent variable rate offered by New Start.

The features have been well thought through. Where the product falls down is in the interest rate and the fact that it is variable. Someone paying maintenance and a mortgage on the second property could well be stretching themselves. A fixed or capped rate could be more prudent.

It is likely that we will see more products like this launched to target niche segments and provide solutions.

David Hollingworth is a mortgage specialist at London & Country Mortgages

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